Intel plans to reduce headcount in its data center business. The company confirmed the job cuts to Business Insider, with an Intel spokesperson saying, "aligning its organization to ensure it has the right roles and skills in place to position the business for long-term success." The spokesperson added, "the company is committed to supporting affected employees through the transition."
This follows a much bigger wave of cuts. In August 2024, Intel revealed over 15,000 layoffs, aiming to achieve $10 billion in cost reductions by 2025. Moreover, last year the company cut at least 15% of its factory workforce, amounting to more than 5,000 employees, across four U.S. states.
Intel did not say exactly how many people will be let go in this latest round. However, an insider with knowledge of the situation informed Business Insider that the adjustments will not impact the data center group's product plans and timelines.
At the core of Intel's struggles is a decline in market share over the past ten years, driven by rivalry from overseas firms such as Taiwan Semiconductor Manufacturing Company.
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Enter Lip-Bu Tan. He took over as CEO in March 2025 and has been attempting a turnaround. The big idea is to develop Intel's foundry business - building chips designed by other companies.
Under Tan, Intel revealed its first named foundry customer: Fortinet, a California-based cybersecurity company, which will collaborate on developing its next-generation security chip. Intel's stock gained more than 6% after that news.
There are other promising signs. Tesla CEO Elon Musk indicated that the electric-vehicle manufacturer intends to adopt Intel's cutting-edge 14A chip process. In May, Intel's shares reached a record high after reports emerged that the chipmaker was negotiating with Apple to produce chips for its products.
Intel's turnaround hinges on successfully expanding its foundry operations, a business that pits it directly against TSMC, which dominates the global market. The U.S. government's nearly 10% stake underscores the strategic importance of reviving domestic chip manufacturing. Tan's focus on winning external customers like Fortinet and Tesla signals a shift from Intel's traditional reliance on its own chip designs.
The U.S. government's investment in Intel also reflects the broader push to secure semiconductor supply chains. Under the CHIPS Act, federal funding has aimed to boost domestic production, and Intel's foundry ambitions are central to that effort.
Tan's strategy of attracting external clients like Fortinet and potentially Apple and Tesla is designed to reduce Intel's dependence on its own chip designs and challenge TSMC's dominance in the global foundry market.
In 2024, the U.S. government acquired about a 10% ownership in Intel, becoming its biggest shareholder.
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